Fonterra Forecast Payment Down

NEW ZEALAND - Fonterra has announced a revised payout forecast for the 2011/12 season of NZ$6.75 - $6.85, for a fully shared up farmer, 15 cents down on the previous forecast.

12 March 2012

2 minute read

Oceania

The revised forecast comprises a lower Fonterra Farmgate Milk Price of $6.35 per kg milksolids, down from $6.50. The season's Distributable Profit range forecast of NZ$ 570 - 720 million, equating to 40-50 cents per share remains unchanged.

Fonterra Chairman Sir Henry van der Heyden said the lower Farmgate Milk Price forecast reflected declining commodity prices and a stronger New Zealand dollar.

NZ Federated Farmers said that Fonterra's payout revision was a "fact of life".

"We've had price declines in the five out of the last six Global Dairy Trade (GDT) trading events," said Sir van der Heyden.

Overall, the GDT-Trade Weighted Index is down 5.7 per cent since December 13 2011 when the forecast of $6.50 per kgMS was announced.

Chief Executive Theo Spierings said the trends were indicating for stronger global production continuing into 2012.

"We think dairy commodity prices are likely to remain under some pressure through to mid-2012," said Mr Spierings.

“I don’t think there are many farmers who were not expecting a downwards revision,” says Willy Leferink, Federated Farmers Dairy chairperson.

“We had indications from the globalDairyTrade auction that prices have been drifting south.

“Most economic forecasters also expect commodity prices will ease over 2012. It’s fair to say the international picture is more than a little choppy, especially with China revising its Gross Domestic Product forecast downwards.

“This is the reality New Zealand’s primary exporters have to deal with. We’re completely trade exposed and it’s a fact of life for us. Times can be good, but we also know from the 2008/9 season, they can be pretty hard too.